Reader Story: Avoiding Student Loans Gave Me a Head Start in Life

This guest post from Lisa is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want submit your own reader story? Here’s how.

Get Rich Slowly has covered ways to avoid student loans in the past, but I wanted to share how I also avoided loans…without a loan from friends or family, without lots of scholarships, and without having huge savings.

Brief Background
My parents had this philosophy about college and their children: If you want to go to college, we will support your decision, but we can’t help you financially. That didn’t bother me. Our family was long on kids and short on money. If they paid for me, what about the other six kids? That’s a lot of cash.

In high school, I was a solid, mostly-A student, but didn’t really shine in any subject; I was a bench-warming two-year basketball player, didn’t belong to any clubs and had no civic interests. In short, I was a good student, but not good enough.

The one thing I did do well in high school was work. I worked in the cafeteria over lunch and earned free food and a modest stipend. I took advantage of my high school’s work co-op program and worked at a bank during the morning (this was supposed to have a purpose, but besides earning money, the only thing I learned was the banking industry was not for me) and attended classes in the afternoon. In the evenings, I worked at a local grocery store.

These jobs enabled me to save around $3,000 by the time I graduated from high school. I also purchased my own car ($700!) and paid all my bills (health insurance, car insurance, gas, eating out, etc.).

In a nutshell, I:

Was completely responsible for myself when I graduated.

Hated debt with a passion.

Didn’t think about student loans as a college-funding option.

Wanted to work a full-time job as soon as possible.

I was off to a good start.

My Career Choice
Many allied health programs are two-year programs, and I found one that would send me off to work full-time in the field in 24 months. The school was an independent program, though it was sponsored by two local hospitals. This was about 15 years ago, but many of these programs still exist. Often, they’re amazingly inexpensive due to hospitals footing part of the bill.

How inexpensive? The tuition, fees, uniforms, and books for the whole two years? $3,000.

As I said, I wasn’t a standout student. However, I found $3,000 in scholarships that were specifically targeted to our school, to healthcare, or to our local area. To stay out of debt, I worked like crazy and added a little bit to my savings. From my high school savings, I was also able to replace my first car by paying cash for a second ($2200). And again, I supported myself completely. I graduated with very little savings and no debt.

Without doing any research (just assuming that there would always be jobs in healthcare), I had accidentally picked a field in which, at that time, a huge shortage existed. When I graduated, tons of jobs were available, many of them offering sign-on bonuses. I ended up choosing a specialty area that was slightly different and paid more per hour. I was trained on-the-job for my additional responsibilities at no additional cost. I may have been nearly broke when I started working three days after I graduated, but I was twenty-years-old, making $40,000 per year with no student loans.

I made some stupid mistakes along the way, of course. But they didn’t hurt me as much as they would have hurt someone with thousands of dollars of student loan debt.

One day, a few years later, my old instructor approached me. “Lisa,” she said. “I’m probably going to retire in the next 3-5 years. Would you be interested in taking my job?” I had never considered teaching, but the more I thought about it, the more I liked it.

“I might be interested in that,” I replied.

“If you are, you’ll need to get your Bachelor’s degree. I want you to start working with me next year. Then after a couple of years, I will retire, and you can take over.”

So, with the help of the tuition reimbursement program through work, I enrolled in classes for my Bachelor’s degree.

Many academic programs cater to healthcare workers such as myself, and I was able to finish my Bachelor’s degree in less than two years, at a pace and method that worked with my life. But it wasn’t easy.

I had to pay for one semester myself. This was the only time in my life I considered student loans. But, through some sacrifices, I was able to pay for my last semester ($1250) with savings and creative juggling of credit card due dates.

Part of the way through my Bachelor’s degree program, I began teaching part-time. My instructor (now boss) was still grooming me to take her position. “You know,” she said, “if you still want my job, you need to get your Master’s degree.”

I spent six months thinking it over. Did I really want her job? Teaching was good, but it was a lot harder than I thought it was going to be. And commit to two more years of school? Educators in my healthcare field are rare; ones prepared with master’s degrees are even more so. She knew they might have a difficult time finding her replacement when she retired. She felt it would be to the school’s advantage to have someone waiting in the wings when she retired, so she went to the Board of Directors and asked to have the costs of my entire master’s degree program put into the budget. That was an opportunity I couldn’t turn down.

I did have to pay $750 when I took slightly longer than expected to complete the program. With a combination of hard work, luck, savings, and my employers, I paid $2000 total for my postsecondary education.

Today, I am still teaching, now at a community college. I have a great schedule, good income, great benefits and find my job incredibly fulfilling. In addition, I have been able to find related work on the side that adds a big chunk to our yearly income.

The Advantages of No Student Loans
Before I started reading personal finance blogs, I didn’t think about the benefits of having no student loans. I realize that student loans can be overwhelming, so I wanted to share my experience in hopes that it may help someone else. No student loans allowed me to:

Save for one year and pay cash for a gently used car

Take vacations

Buy furniture

Contribute to my 401 (k), beginning at 21-years-old (10% with a 3% match)

Donate money to worthy causes or friends in need

Pay off my husband’s student loans

Purchase our dream house with more than 20% down

Maybe something like this would work for you, or maybe it wouldn’t. But I am so thankful for how it’s affected my life and the life of my family.

Reminder: This is a story from one of your fellow readers. Please be nice. After more than a decade of blogging, I have a thick skin, but it can be scary to put your story out in public for the first time. Remember that this guest author isn’t a professional writer, and is just learning about money like you are. Henceforth, unduly nasty comments on readers stories will be removed or edited.

We were just talking yesterday at a party to someone who had taken a very similar track.

What I think is criminal is how teaching salaries in the healthcare field are so low compared to practicing salaries or salaries for other in-demand fields. Nursing PhDs should be making as much as Pharmacy PhDs but they’re not, and there’s a huge shortage of them. So the employment is there, but for some reason wages aren’t adjusting, even though they should be. It doesn’t make sense.

Teaching salaries in the healthcare field are lower than those practicing simply due to liability and additional responsibilities. Lots of people would like to teach and prepare slideshows, not everyone wants to handle blood and cytotoxic chemicals.
Pharmacy PhDs make more than nursing PhDs mostly due to supply and demand. There are simply more nurses out there. Additionally a nurse might have 2-4 patients while a pharmacist is looking at 2-4 more more patient units (30-100 or more patients).

No, that’s not true that pharm phds make more than nursing because of supply and demand.

There’s excess demand and under-supply of nursing phds. (Which would suggest that wages should shoot up, but they *don’t*.) That is exactly the paradox.

Doug Staiger has a paper on the topic, but it’s also well-known in the nursing field– it is nearly impossible to get phd nurses even when needed for accrediting purposes. It is a mystery that economics cannot explain (or has not explained yet). Nursing professor salaries should go up in order to fill the shortage, but they don’t. Heck, the relatively low nursing salaries compared to excess demand until recently for practicing nurses was also a mystery (though Staiger suggests that’s because of monopsony power on the part of hospitals– monopsony power makes no sense from a university perspective, however, because all other professors are in the same situation).

Personally my guess is gender discrimination on some sort of structural level, but unless one is Marxist, that fits better with something Sociologists can explain than what Economists can explain.

It is a negative feedback loop. Why should you put in the money and work to get a Ph.D. just to earn less money? I know nurses who would love to get their Ph.D., but just don’t see the point. As a result, the shortage of nursing Ph.D.s leads in turns to a shortage of nursing schools so that we can solve the nurse shortage.

The solution is clear, but apparently nobody can figure that out.

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Rosasays:

06 May 2012 at 6:05 pm

Teaching pays less than practice period, & always will. I worked at a Faculty of Dentistry, & we had chronic problems finding faculty. When you can teach oral surgery for $100,000 or be an oral surgeon for several times that much, few people choose academe.

Great story, thanks for sharing. Just curious, what year and what area of the country did you start the 2 year allied health program? Did you stay in the same area of the country (or same city) throughout your job changes and education advancements?

Marie – I started my program in 1998 in the Midwest – and I’ve stayed in the same city the entire time. As Nicole mentions above, salaries are lower for allied health educators, especially at my college. There are other opportunities for me that would pay more. However, I like what I am doing and make enough.

I work at a major US university that is very expensive. Lately I’ve been seeing “protests” related to education costs. My favorite was a sign that said “Education is a right”. I have a hard time sympathizing, even empathizing, with these kids that take on 6-figures in debt to study “vocal performance” (I found out recently this is actually a major).

It makes me remember back to when I was choosing a college. I wanted to go to Duke, but it was ~$35k a year, and scholarships would only cover about half that. So instead, I went to a small liberal arts college that gave me a free ride. I knew going into CS / Mathematics I would have a decent-paying job (much higher than the average vocal performance major), but I refused to accept that much debt, and boy am I glad I did.

That’s why I don’t understand these people who expect us just to forgive their student loans, on the basis that their education was a right, not a privilege.

I totally agree, whenever I hear about someone taking on six figure debt for ANY degree program, I cringe. I can sympathize a bit with those who take out those kind of loans for the medical or law professions, but anything else and you’re just flushing money down the drain that you’ll never see a return on.

As for education being a right…well, for 12 years, yes, education is a right.

The bigger problem is that many people my age (26), were raised by parents who may not have had the chance to attend college, yet thanks to great economy of the 90s, were able to afford, and wanted to, send their kids to college, but they had no idea why or how it worked. How else can you explain ANYONE with a clue spending 100k+ on a liberal arts degree?

That’s a good point about the parents, George. I think a lot of kids aren’t aware (and at 17 or 18 maybe at no fault of their own) of their options wrt different programs and different ways to pay for school. All uni programs are not created equally, and having parents pay or taking out massive loans aren’t the only ways to afford school. I wrote about it just recently, but I just graduated with a master’s and no debt. I worked as I went and was able to earn just enough to pay for the next semester. I feel strongly that if someone isn’t able to find work in their field as a student, then they’ll likely have a tough time finding work when they graduate.
Graduating without debt is such a blessing because it allows me to be pickier about jobs, and now I’m actually planning to take time off working in my field to move to France to attend culinary school. No way I would be able to do that if I had tens of thousands of dollars of student debt hanging over me!

This is EXACTLY why I’m in the place I’m in. I had wanted to go to college since the time I knew what it was and my parents wanted it for me, but no one in my family is financially savy. My parents have all kinds of financial issues (which, of course I know about now, but when I was in high school believed them about “hard times” and such) and make some poor choices.

Long story short, I’m not quite 6 figures in debt, but I have about tripe the national average in student loans. And that “doubled” rate that President Obama is worried about? Yeah, I pay that. It’s only now that I can look at my parents with an adult eye that I see why I thought what I thought (that student loan debt is “good” and that I’ll always be able to “pay it off later” and that I “should concentrate on my studies” instead of adding a part-time job) and how incredibly, incredibly stupid I was.

Here’s the thing, though: I WANT to pay my loans. I WANT to do it as fast as possible. If we’re going to talk about interest rates and loan forgiveness and such (btw, there are a LOT of loan forgiveness programs out there, just not for “voice majors!”), I wish we could talk about lowering interest rates for people who pay on-time, pay more than they have to, etc. I have good credit, and my car loan has a lower interest rate than my student loans from the Federal government. It seems kind of crazy to me.

As a side note, Jill, I do think its possible to “live” and be “picky” even with many student loans. I’m moving abroad soon because I got a job, and when I was job hunting, I didn’t take a few offers because they didn’t feel right. I could do that because I moved back home with my parents and work several part-time jobs to pay (and overpay) my loans. Yeah, I don’t have as much flexibility as you (some day), but if you prioritize things, it’s possible to still have choices.

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Carlasays:

06 May 2012 at 10:30 am

I like how we practically drill into the heads of children and adults how worthless (financially and socially) their lives will be if they don’t go to college, yet a the same time a “college education is not a right”.

Then we expect a 17/18 year old to fully understand the financial and emotional repercussions of taking on massive debt at a time where a job to pay it back is not a given.

Don’t forget the way the states have been defunding state colleges for the last decade. That’s after a big shift away from grants and scholarships to debt on the university side.

It means parents, even young ones who went to school relatively recently, don’t have really relevant experience to share with their kids, because costs have changed so fast.

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Katiesays:

07 May 2012 at 8:08 am

Just to second Laura – my parents had a much different experience with funding college and graduate school. Tuition was more reasonable (after adjusting for inflation, of course) and loans were far less expensive. My mom had a full ride in college and took out some small loans to cover a few books, etc. Her rate was really, really low. I’m now paying up to 8% on some of my loans. These are not private loans; they are loans from my state’s higher education “assistance” fund. I could have purchased a house for the amount of money I’ve already borrowed for medical school; however, there is just no way that I could have saved for tuition ($30k when I started and going up every year!) before I entered school if I wanted to finish before I was 30. So every year I research different loans, apply for scholarships (got a small one, but it was a nice gesture and I definitely appreciate that it will save me money in the long run), and try to finagle something different, but I keep finding that there is no good way to finance my education without derailing my actual career goals (I work here and there, but there is no way I can hold down a 20 hour per week job and still do well in my classes on my rotations. We have some students who work more than I do and I swear, they must be superhuman).

Like some others said, I think it’s pretty messed up that cars and houses are cheaper than education, especially in some fields. We are going to be short hundreds of thousands of physicians, yet there is still a $100-$200k hurdle in front of many students who want to be doctors, in addition to the 3 or 4 years of undergrad you need to pay for.

Yes, you can join the military (if you’re eligible), yes you can search out loan forgiveness programs, but it’s HARD and the costs are staggering. I wouldn’t expect a young, idealist kid to be able to figure it out. I still get palpitations thinking about it and I’m in my mid-twenties and have some experience managing cash and living on a budget.

That’s why I don’t understand these people who expect us just to forgive their student loans, on the basis that their education was a right, not a privilege.

I don’t understand how you can tell a story about how you didn’t have to pay for college and got someone else to cover it completely for you, and end with surprise that other people want to go to college without having to pay for it.

It’s no surprise that people want to go to school for free. It’s a surprise that they decide not to and then act appalled that Fannie Mae or whoever wants their money.

Do you really not see the difference between having someone else voluntarily pay for you school (via scholarships) up-front vs. having massive loans obliterated after the fact (which everyone would eventually pay for)? I’m sure you do but just felt like being snarky.

What if I had started my story with, “I just finished paying off $100,000 in school loans and…”? What would be different about the rest of what I said?

There is a real problem with educational opportunity in this country. Lots of people can get scholarships to cover tuition, but most scholarships don’t cover room and board, and these non-covered costs are WAY MORE expensive nowadays.

When I was in my freshman year of college, I nearly had to drop out because I couldn’t qualify for loans. Let me say that again — I couldn’t qualify for loans. My parents were flat-broke, wouldn’t fill out any of the FAFSA paperwork, and the college wouldn’t give me any loans in my own name. I couldn’t qualify for any of the need or merit-based aid programs without having the FAFSA forms. I couldn’t fill out the FAFSA forms myself because they required tax information from my parents, who had not filed their taxes in a few years. My grades were good enough that I had several scholarships, but they didn’t cover living expenses. I couldn’t live at home because that was the bad situation I was trying to escape. The college infrastructure was so backwards that the college counselor advised me to drop-out.

I ended up getting together enough money to stay at college, and worked two jobs to pay my way through with no debt. But there’s no way I could do that today because the costs of attending my alma mater have doubled! And those good paying part-time jobs I had no longer exist (downsizing).

If you think the answer to educational debt is “live at home,” “save some money,” or “get a scholarship,” then you have the benefit of never having to worry how you are going to eat before your next paycheck clears or where you are supposed to go when the University shuts down for the holidays.

Some people look at educational loans like they are a big problem, but sometimes an educational loan is the only way for someone to have a chance.

I’ve never defaulted on a loan, nor have I ever considered bankruptcy. But as to whether educational loans should be dischargable, ask yourself why walking away from a housing debt, car debt, or any other debt is more noble than educational debt? Why are companies and individuals allowed to declare bankruptcy and default on their obligations for so many terrible reasons? Why are educational loans so special that they must live forever?

I believe it’s only government-subsidized student loans, like Stafford loans, that are not bankruptible, and it’s just for that reason – the government has guaranteed them. That’s not true for most mortgage loans, and not at all true for car loans and credit card debt.

There are lots of places in the world where post-secondary education is a right though- http://en.wikipedia.org/wiki/Free_education#List_of_countries_with_free_post-secondary_education
Many of these countries also rank highly for equality and happiness, like Denmark. Ok, so some of them, like Iran, probably don’t. But Brazil, China, and Russia are on that list, and they’re setting themselves up to be the new world superpowers. A well educated population is a very powerful thing.

Post-secondary education used to be a right in the UK too. Now our politicans, who went to university for free (and could actually claim unemployment benefit money too while studying) have hiked up the tutition fees to £9K a year for no good reason. Is it any wonder that young people are upset?

People don’t like the idea of free education because they don’t think they should pay for the study of things they don’t support (like you mentioned above with Vocal Performance). The problem with that is that many of these people know NOTHING about the subjects, and have arbitarily assigned little worth to them. How do I know this? I’m a ceramic design student. I get people all the time going “oh that’s not a really subject.” Isn’t it? Do they know how big a part of the UK economy art and design is? No, they don’t.

The elite Chinese (a growing population) make it a point to birth here to get the passport for their newborns just to ensure their children are educated here. Seriously. There’s an entire industry of birthing houses/extended stay operations if you want to look it up. So, that should say something about the “Free” education the world can deliver. That should say something…about everything.

Ah, but the elite chinese are making sure their kids can go to school here, because its so much easier to get into a school here, not because the schools are better, and China is not a country that offers free education. Well that and so that if things go south in CHina their kids will be able to leave. they’re also flocking to Europe

I think we have a separate definition of “right” in our heads. When I see the word I think of things like constitutional rights, which should be derived from some kind of ethical system. With this definition, education is definitely not an innate right.

On the other hand, there are plenty of things I think should be paid for (i.e. supported by tax dollars). I would love to see quality education made affordable (or even free if it’s sustainable). However, I don’t think we should confuse such a privilege of living in modern society with basic human rights.

Re-reading my original comment, I’m slightly embarrassed by its tone, in particular towards the arts. It came across as arrogant and better-than-thou-art-ish, which I’m most certainly not. Apologies to anyone it crossed the wrong way.

Actually, yeah, I agree that the definition of “right” can be used a little too broadly some times. There are many things that I see as basic human rights that are still being denied to people even in the developed world- things like the right for a homosexual couple to enter into a contractual bond similar to marriage that allows them the security of being in a legally recognised couple.

Education may not be a right, per say, but the opportunity to learn without fear of going bankrupt should always be there, in my opinion. I see a lot of people now going to school as mature students because they always thought it was out of their reach when they were younger. They say things like “I wanted to do this when I was younger but I couldn’t afford to not be working then.” That’s not a good thing- some of these people have been working jobs they hate their entire life because education was unattainable to them.
Similarly, I know of people who got put off studying what they wanted to because they were told time and time again that financially it wasn’t worth it. This is often due to parental pressure- the brother of a friend of mine ended up dropping out halfway through a dentistry degree that his parents had encouraged him to do. He’s now doing music and is much happier, but has the black cloud of those first student loans (student loans are slightly different in the UK though), plus the worry of maybe not being as employable when he graduates.

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Ramblin' Ma'amsays:

07 May 2012 at 7:25 am

I remember learning about these different kinds of rights in a college ethics course (happily, I only had $15K in student loans). The rights found in the Constitution are called “negative rights”–rights that can’t be taken AWAY from you. “Positive rights” are things you are entitled to be GIVEN. Depending on whom you ask, these include things like food, shelter, free education, health care, etc.

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Slccomsays:

07 May 2012 at 1:31 pm

I actually agree with you about music performance degrees that people pay huge amounts of money for from mediocre schools. Or decorative art degrees. Or creative writing degrees.

If you can pay out of pocket for these, or get full-ride scholarships, and work on selling your product during the schooling to make sure that you can earn money with your work, great. Otherwise, get a degree in something that will provide a livelihood and do the arts stuff as a hobby that perhaps eventually you can turn into a livelihood.

Incidentally, I don’t know if they do, but such degrees really should require courses in running a business as a self-employed person, bookkeeping, etc.

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Adriennesays:

11 May 2012 at 11:35 pm

I worked my way through school as a piano major (yes, there’s actually such a thing!). After going to community college for two years, while working full-time and living with my folks, I went away to a four-year State university (not an expensive conservatory). I worked odd jobs during the school year and did temp work over the summer, saving most of what I earned to pay for the next school year. I lived at home while getting my master’s (also in piano performance) and borrowed $6000, which I paid off in a year because I continued to live for one more year with my folks after graduating. Fast-forward to now where I am still able to make my living in the music industry. I’m able to take singing gigs from time to time and I just helped my intern pay for her fiddle camp! It’s really up to each person to decide what their life’s work is going to be and how to best accomplish it. Not everyone needs to go to an expensive school. And no, I don’t still live with my parents!

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BethRsays:

07 May 2012 at 7:19 am

YES! When people hear art and design, they tend to think the paintings on their wall and forget that everything in their lives was designed by someone. Sure, the “arts” include things that are non-essentials that enrich our lives, but they’re also so deeply ingrained in our culture that we often overlook them.

Throwing this one out there: I got my degree in music business with a concentration in vocal performance. In other words, I’m a singer. Now, before you want to act all incredulous that there’s a college degree for that, please bear in mind that not everyone is Lady Gaga or Justin Bieber. There is a very rich history of the vocal classical music tradition and it is marvelous–granted, it may not be your cup of tea, but I know several in my graduating class–2007–who are earning a nice living teaching private voice lessons, group lessons, instructing at colleges, and singing for regional and national level opera houses and theatres. Please do us all a favor and educate yourself before you publicly take offense at the mere (non-inflammatory) existence of vocal performance as a major. I promise–it won’t bite

I’m glad Rachel raised this – I’m also irked by people who don’t think that a degree in the performing arts is a “real” degree. Do they think that everyone gets discovered ar a drugstore counter? People tend to be very ill-informed about the amount of very hard work that it takes to succeed in the performing arts – or the arts of any kind.
I’m the parent of a student who is about to enter a performing arts program. I have to say that I see much more motivation from these “theater kids” than I see from a lot of students who are simply going to college as a “next step” without really questioning what they want to do with that college degree.
Going into the arts is something you have to be passionate about – you know that the financial rewards are unlikely to be great, you know that others will question your choices – but you do it anyway. And you get the degree because it helps open doors and extend your abilities as a performer.You do it because you need to – not just because you want to. Anything in the arts is tough, competitive and brutal – this is not a field for the frivolous.
And you have to be realistic. My daughter was accepted to NYU’s Tisch School for the Arts – ostensibly one of the best in the country – but for $55K+ per year (minimal financial aid) there is no way she could afford it without massive debt. She chose a less expensive program with better financial aid that will allow her to graduate with less debt. Which will allow her to take the low-paying jobs that she will need to take to jump-start her career.
Oh yes, and by the way, if the arts don’t work out at least she will have a degree to fall back on because, 5 years on, a degree in performance means just as much as any other liberal arts degree. Nobody cares what you got your degree in – they just want to know that you have a degree. So, like many things, it’s worth the investment – if you balance the investment by considering the risks and rewards.
Here endeth the rant of the theater kid parent

I am not knocking you at all, and you sound like a very smart, hard-working lady who has made a lot of good choices. I suspect you are about my age (35). What strikes me now is how different the jobs climate is for young people. I graduated in 1998 armed with a Political Science degree and moved to a major city and got a great job in IT (with NO IT experience at all, mind you) within a month. Now, the same company today would never hire someone with my lack of experience, we get all Computer Science majors with solid backgrounds now, if we ever hire at all. This company was hiring like crazy back then!

I don’t envy graduates today, the job market is totally harder and the loans have increased exponentially in 15 years. The private school I went to was about $15k a year then, it is now over $40k!!! In 15 years!!!

I think people really underestimate to what degree this is happening, and subsequently to what degree it makes advice from 15 years ago somewhat obsolete. I’m currently getting a second degree from the same school I graduated from in 2005. At that time, a year of classes (2 15-hr semesters) would cost around $5600. Now it runs closer to $12300. In shorter than seven years. Meanwhile, grants and scholarships are harder to come by, and textbooks are hardly getting any cheaper. I had a full-time job before I went back to school, and if I still had it now, I would literally be able to cover only expenses related to school, and nothing else.

Jen and Becka, Yes, you’re right. Some of my experience is obsolete, so this it’s a different opportunity now, but still a very real one. Here’s why: 100% of my graduates find a job within 6 months of graduating (but not within 3 days of graduating). The last two graduate classes had the opportunity to have 100% of their tuition, fees and books paid for by a grant (but you’re right, it’s now about 10k for 2 years instead of 3k).

I would absolutely agree Becka that advice from experiences even 10 years ago is obsolete. I started college in 2005 and graduated in 2010 (one semester off, one 3 credit semester w/ internship), and my little sister started at the exact same school in 2010. Over the course of her BA degree career, she will probably have to spend at least $10,000 more than I had to. That’s due to a ridiculous rise in tuition and housing costs – and that’s over 5 short years and at a medium-sized public university. I also think that even finding well paying summer jobs is becoming harder and harder, because students are competing with people who have been laid off or underemployed and are just trying to get a job in general! Not that I knock people who manage to work through with no debt, good for them! And I agree that there should be programs in place that give people fair warning about taking out tons of student loans for low-paying major (it should not even be possible to take out 6 figures in loans for vocal performance!!). But school is more expensive now and more difficult to pay for ahead of time while simply working with a HS diploma.

Yes. I burst out laughing when I saw that this was a story about someone who got their degree 15 years ago. Tuition has, at a minimum, doubled since then. Some places it has tripled or quadrupled. I consider myself very lucky because I’m graduating this year with only 15K in subsidized loans for my bachelor’s (and I’m about to get my master’s for free), but I couldn’t have even done that without scholarships, grants, and help from relatives. It’s still an interesting story about how someone was able to get through without taking loans, but the situation my generation is facing is radically different from the one our parents did. I work 30 hours a week at a rate above minimum wage and my entire yearly income is still less than half of two semesters of tuition at my public university.

My husband and I raised our children near Pasadena, CA. When it came time for my oldest to go off to college we didn’t have the money to send her off to school.

I suggested that she attend Pasadena City College and, making certain that all of her skills were transferable, she went on to Cal-State University of LA. She received her Bachelor’s degree and went to work in one field. Later, she decided to become a Librarian. She applied for and received financial aid from the Los Angeles Library System. This led to her graduation with a Master’s Degree.

She missed the “experience” of a college away from home, but with this “step by step” route, she was able to achieve something that could have led to years of debt.

I also will be graduating with no student loans. After graduating high school I started working full time for a chain retailer. One of the perks is that they will pay your tuition up to $3000 a year. I went to community college for free and when I transferred to a four year school to get my bachelors degree it paid for everything but about $1000 a year. After I get my bachelors degree I plan on going for my masters, which they will pay $7500 a year! Sure, I am moving at a much slower pace than my friends but I am the only one who has a positive net worth at 24.

Frankly, I don’t know how this story is applicable to young people just entering the job market. 1998 was a really different time than 2012. We’re not at full employment as we were in 1998; instead we have baby boomers staying in their jobs for as long as possible because their retirement savings were obliterated in the downturn. Then younger (Gen X) people can’t move into those positions, and that has effects all the way to entry level. This means that students have a difficult time finding the jobs that would be able to offset or pay for their education expenses. Furthermore, state and federal spending on universities has dropped significantly, so tuition increases are disproportionately large.

I’m all for student loan reform–interest rates of 6.8% is usury when prime is closer to 3%–but I’d argue that it’s extremely difficult to do this now, if not downright impossible… unless you have special connections. Which probably means you don’t need to pay for yourself anyway.

With all do respect, this comment belies an ignorance in fundamental economic principles. There’s such thing as “risk premium.” Riskier loans command a higher interest rate. Correspondingly, there is a “security discount.” That is, loans secured by appreciating assets (like a home in the case of a mortgage) command lower interest rates than loans secured by depreciating assets (like a car in the case of a car loan), which in turn command lower interest rates than loans secured by nothing at all (like a credit card or signature loan).

Some student loans are “secured” by a government promise to cover any losses. But not all. They’re also “secured” by legislation excluding them from bankruptcy eligibility. My point is, it’s a broad spectrum, and it’s ignorant to say that student loans should have a lower rate, just because the product they’re used for (education) happens to be virtuous.

Perhaps they should have a lower rate because they cannot be discharged except for extreme circumstances (total disability or death). Never mind the fact that the government has more tools at its disposal to make you pay. Even programs that forgive portions of loans often require years of service in underpaid jobs.

I had a different experience from you re: why I had no scholarships from undergrad, but I totally agree about no loans making life much easier. I had no loans from undergrad nor from my first master’s degree (and I got paid $20k+ per year to get that second degree because I taught for the uni). I was able to take lower paying jobs simply because they were interesting, and I was able to explore different parts of the country. I really enjoyed this freedom.

I just went back to school to get my teaching license, and I am two classes away from finishing my MAT. There are not a lot of scholarships for this. I had the money in cashflow and emergency savings to pay for my degree, but I got offered subsidized loans, so I took those. I did teach for the uni and thus only had to pay for half of my classes each semester. I have $13k in loans, and I *have* to get a job next year. This is an unwelcome and unaccustomed spot for me to be in. I shouldn’t have any problems getting a job, but you can bet my first priority is paying these loans down ASAP so we (my husband and I) can have freedom to explore moving to a new part of the country or abroad without loans to worry about.

Just putting it out there that the teen and youth unemployment rate is somewhere around 20-25% (higher for minority youth, a little lower for white youth).

So, it’s great advice for a high school student to get a job in order to save for college and for a college student to work through school, except that 1 in 4 or 5 students who want to do that can’t find work. (And there are plenty of students who aren’t actively looking and so aren’t included in that statistic.) Many of those that do find work receive minimum wage, to pay tuition that is going to be between $30,000 and $60,000, for an in-state public school for four years.

For many young people, going into debt is the only way to pay for a college education, and a bachelor’s is still the strongest indicator of a person’s income trajectory over their lifetime. Rather than presume a debt-free eduction is a possibility for most, I think it’s more important for us to teach students what a reasonable amount of debt is and about the burden of making payments after school (and therefore making smart financial decisions through college and after).

I have to say I am jealous of your situation. Being 24 and paying off a ton of student loan debt sucks. Admittedly, the main pressure for me to go to college was to keep my parent’s health insurance (it only covered full-time students). Probably one of the dumbest reasons to ever justify that expense.

Dana,
Don’t be jealous. I understand the sentiment completely, but you are still a lot better off than a lot of people I know who have been where you’re at and worse. When my wife was in law school, we had a child and lived well below the poverty level. Health care insurance – way down on the list of “needs”. We needed food and shelter and that’s about all we had. What that experience did for us was to make us so hungry (literally and figuratively) that we worked so hard to ensure our kids would never have to go thru that. You may not see it now, but trust me, it will (and is) serving you well. Time will show you just exactly how. Best of luck. We feel your pain, but you’ll make it and be stronger for having done it.

Our son is about to graduate from college with no debt. Yeah! But, he wants to go to law school. How in the world can you go to law school debt-free? Tuition alone is about $35,000. He’ll be moving home and working for at least a year and saving every dime he makes, but that probably won’t even cover 1 year of tuition. Any ideas?

My advice is for him to have a plan to do it debt-free before he starts. He should also have an idea of what he wants to do in law and make sure that 1. the return on investment is adequate and 2. that he actually does need a law degree to do the work. I was in the position of graduating from undergrad debt-free, but my goals required professional school. I was 20 (started college young) and proud of myself for being debt free, but still bought the illusion that student loan debt is “good debt” and that it’ll all work out somehow. I went to a school that was $30,000 a year for 5 years and now, with interest, owe $172,000. This was even with working part-time and having family support for living expenses. Finally, 5 years after graduation, I’m making decent money, but still nowhere near enough to justify the kind of debt I’m in. I’m on income-based repayment and in public service, so my plan is to qualify to forgiveness – not the greatest, but it is really my only viable option at this point. I didn’t go to law school, but my experience closely parallels friends who did. Honestly, much of the anger regarding student loans is coming from graduates of law schools who feel like they were told they’d be rich lawyers and then can’t find a job or get $45k/yr and can never pay off the debt. Your son should read some of those blogs and make a really informed decision. Law school is not always a bad idea, but too many people don’t educate themselves on these issues until it’s too late and taking on this kind of debt at a young age is something that’ll be with him for a really long time. I wouldn’t wish it on anyone and if I could go knock some sense into my 20 year old self and change the past, I would in a heartbeat. It sounds like your son is at least aware of the pitfalls and will hopefully keep himself out of this position. It’s impressive to get through undergrad debt-free these days – I graduated in 2001 and tuition has doubled at the state school I attended, so working through school doesn’t cut it anymore much of the time. I hope he can graduate from law school the same way if he does decide to go.

Bob,
Great points – thanks. Can I ask what advanced degree you got? $172,000 in school loans if horrifying. I had undergrad loans and my wife had law school loans and combined they didn’t amount to $100,000 – but that’s because we went to school 25 years ago. Our loans did, however, serve one good purpose (besides teaching us how to live well below the poverty level for years on end) and that was to start 529 accounts for our kids just the minute we were able to do so – which (along with some scholarships) accounts for them getting out of college debt-free. But now we’re looking at retirement in the next decade and we’ve got to budget for that so I don’t know how much financial assistance we’ll be able to give him if he does go to law school. Hmm…..

My best friend from high school did indeed go to law school tuition-free. She went to a smaller but still pretty well known law school, and received a full scholarship from the school. To keep it each year she had to stay at or near the top of her class, but she did it.

I think your son should seriously reconsider. He should try hard to find a decent job, get a couple of years of work experience, and build up savings. There was a time when law school was a good “fall back” option for good liberal-arts majors, when they could be assured of employment at sufficiently high salary to pay back loans. But that’s no longer the case. The U.S. is glutted with thousands of unemployed law school graduates, even from top law schools, who are stuck with loans in the $100k — $200k ball park. Now is NOT the time to join them.

If you find data saying “93% of our graduates are employed upon graduation” don’t believe it. Many of those people end up in low-paying temporary or contract positions that any college graduate could do. Some law schools even hire their own graduates for 3 months just so they can report them as “employed upon graduation”.

Do some research and read recent articles. Try a google search for “unemployed law school graduates”.

If I’m allowed to post a link, here’s an article in the Huffington post:

Unless he can come out virtually debt-free I have to agree with Monika. This is NOT the time to be going to law school. There is a huge glut, enormous and the prospects for lots more jobs opening up just really aren’t there as more and more things can be done with less work, overseas, etc.

I would definitely recommend trying to save up a substantial sum, while interning or working somewhere that is like what he thinks he wants. A year or two of seeing what being a lawyer is really like may well change his mind entirely!

Jen & Monika,
Thanks for the input. I hear you. And I don’t want that kid in debt at all, if I can help it. He does know what lawyers do. His mom, grandpa, 3 uncles and 2 cousins are lawyers. I think it’s in his blood. If it is and if that’s what he really wants to do, we are going to do everything we can to keep him living at home for free while saving every cent he earns for as long as he can stand living back home with his parents. But I appreciate the comments and will certainly share them with him – want to give him all sides of the argument.

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Danielsays:

06 May 2012 at 11:09 am

To echo what someone else said, I think also one has to consider the job climate for young people now; as well as how we do financial aid. First, I graduated from a private East Coast university with $15,000 in debt. I got the rest paid from working, grants, and scholarships. (I’m one of those middle class who is too rich for gov’t grants, but too poor to afford it myself). Those, who tell me I should have gone to public or community college. Really? Because the best offer I got from a public school was either $2000 in grants out of $12,000 or join ROTC (which I tried and they decided they didn’t want a flat-foot, half-deaf man). So, it was cheaper to go to a private school. In addition, I graduated right at 2007 at the beginning of the Great Recession. It took me eight months to get a job in teaching because of the recession and that was only because of networking with alumni. That said, I thought it’d still be okay, because I’d get pay increases and I’d pay off my debt with loan forgiveness working in a Title I funds. Well, after working four years, I got laid off, along with half of the other teachers at my school, thanks to Gov. Perry and his “pro-education policies” (Insert Sarcasm here). Luckily, I got hired back in that same district at another Title I school. However, to my surprise, no loan forgiveness because according to the gov’t, “I didn’t show the commitment to work at the same Title I school.” Also the pay and / or step increases I received in this district in the past five years? Once, with a whopping $900 (or divided by 5, $180 each year). Along with increasing health care costs, medical emergencies, and a recession, welcome to the United States of Debt, where in Big Business We Trust. Sorry, but not all of us are vocal majors or theology majors with a $100,000 student debt. We need a new higher education model that doesn’t use 20th century theories and practices, especially towards costs, and cutting current student loan rates is just a band aid.

Thanks for all your input. Appreciate it and it certainly is food for thought. Tough decision to make. Do you go for it, knowing the costs/risks involved or do you play it safe and possibly give up on your life’s dream?

This story is just funny. As a financial aid director at a community college, trust me, this story is not a realistic picture of paying for education in today’s world. There are so many misconcenceptions in this story and in reader’s comments I don’t know where to begin.

Hmmm, could your response be just a tiny bit biased? You don’t know where to begin? Seriously?
You have not provided any support for your argument, yet you are attempting to make what could be an interesting point. Will you please expand upon it? If you don’t know where to begin, just start anywhere. We’re all ears.

The rising cost of tuition has nothing to do with access to student loans. It has to do with the fact that every state in the nation keeps cutting funding to their institutions of higher education leaving schools no choice but to raise tuition. Someone explain to me the logic that a student taking out a loan makes us raise tuition? I promise when the board of directors decides to raise tuition it is an agonizing decision and they never discuss how much a student can take out in a loan to decide how much they should raise tuition. Not to mention the fact that students are limited to $57,500 in student loans as an undergrad.

I am a first generation student from a low income household myself and I work with students every day that are struggling to survive let alone pay for education so they can have a better life. I believe we have a right to a life that doesn’t include poverty and education is one way out of poverty. But, if you don’t believe we should help the less fortunate then how about education for the sake of being able to compete globally? If we don’t have an educated work force then we’ll just keep letting the rich get richer and the poor get poorer because international companies are going to go where there are educated people.

I wish I had time to respond to every comment on this thread but unfortunately I have to do more with less so I work 50-60 hours a week and I promise I’m not making six figures. And this holds true for most of my colleagues in the financial aid field. We are stretched to our limits trying to keep up with the demands of our profession because of financial cuts. Professors are paid differently and yes some make six figures but if you spend all that time, energy, and money getting a PhD shouldn’t you be compensated? Don’t you want the best and the brightest teaching so that when you get a degree it means you had to work hard to get it because your teachers were educated and they passed their knowledge on to you? And just because we work in the public sector do we also have to take an oath of poverty?

It sounds like you had some great opportunities come your way and you actually took advantage which is great. I was lucky in that my parents paid for half of my college and through scholarships and working myself I also graduated debt free. Being debt free opened a lot of doors for me and let me take advantage of several opporunities I wouldn’t have been able to otherwise.

That was an inspirational read!… I’m a senior graduating from college and about to marticulate in grad school next year. I don’t have any undergrad/college loans.. but my grad school loan are gonna be 50k per year for the next 4 years (= 200k)…

I have absolutely no way of footing the bill, and neither can my parents.

Don’t go unless someone else pays for most of it in the form of scholarships, grants, and tuition remission.

The exceptions: there are a small number of professions in which all student loans are forgiven after you have worked in a particular kind of job and paid down your loans for a certain period (varies from program to program). For example, if you are heading to medical school, plan on working on a reservation or some such place for the first phase of your career.

atk,
You are in a very similar position that our son is. As I would advise him, PLEASE do NOT get that far into debt. What are you planning on studying? It would have to be a very, very high paying occupation with lots of “need” for your types out there. Here are a few things our son explored (but for health reasons didn’t work for him) – Air Force/Marines/Army. He’s also going to move back home (for free) and save all the $ he can possibly make for as long as he can stand living back home with his parents. He’s also checking out the “loan forgiveness” programs – where you basically agree to use your area of expertise in a (probably not real desirable location) for a few years in exchange for some debt forgiveness. And he is applying for every grant/scholarship etc that he can come across – even the far fetched ones ’cause even $500 would help. In addition, he’s looking into schools that have 1/2 time programs so he can work while continuing his education. Best of luck, Buddy. But speaking from experience, you do NOT want any where near that kind of student loan debt. It affects all kinds of things (how much of your salary you and your family can live on, how much you can contribute to your retirement and your own kids’ education, what neighborhood you can afford to live in – which impacts the quality of schools your kids will go to… blah, blah, blah). The list never ends. So please, for your own sake, do everything you can to minimize the amount of debt you incur.

I usually don’t leave comments but I have noticed a disturbing trend on GRS promoting anti- student loan opinions and publishing articles that seem to be very judgmental and critical of people who do. First, no one WANTS to take out student loans, but for many students loans are an important piece in funding an education, without which many, especially low-income, minority or first-generation students would not be able to fund. High school diplomas, community college and degrees from mediocre institutions will not give today’s graduates a competitive edge in this global economy. In order to have a fighting chance most people need a degree from a reputable institution. And that costs money. Additionally, since the author brought up her work ethic more than once, I hope that the author is not suggesting that people with loans are not working hard while in school. On my campus, it was the students with student loans who had the most jobs. It is unfortunate that many people do have to fund their educations with loans but that’s because $3000, a part time job and a used car are just not cutting it these days.

Incidentally, I was a low-income, first-generation college student. I am actually not against student loans that are reasonable and will not be a huge burden on the student once he/she is working. My husband had student loans which were manageable. On the other hand, I have three younger siblings who have staggering student loan debt from art school, culinary arts and a specialized automechanic program. It’s tough for them.
Lastly, my work ethic (if I have one) was just a piece of my no-student-loan journey. I have many hard-working students who have student loans. Most of all, I realize I was in the right place at the right time.

I totally agree on the anti-student loan bias being prevalent lately. I’d be more than happy to write a reader story about having student loans, paying them back over 8 years, and still managing to sock away money for retirement, buy a house, get married and pay cash for the wedding, etc.

I am a person who took out some student loans (I immigrated from a poor country, and did not have a whole lot of options to go to school otherwise). I took out the Stafford loans, both subsidized and unsubsidized. Went to community college for the first two years, then a good state school, got a few small scholarships to help along, worked a lot while in school, too. Graduated with a degree in CS and about $22K in student loans, paid them off in 10 years, have money socked away in retirement, recently bought a house. The payment plans are very reasonable, the interest also not bad, my salary is probably triple what it would have been were I not to go to school. Now, I could have taken MORE loans (I tried to avoid unsubsidized loans, and no private loans for me, thank you very much), but, to repeat myself – I knew that I will be paying this money back, and tried to minimize the total, by working/seeking scholarships/living very modestly. Note that I was not an American citizen at the time, so things were a bit more difficult to me.

All in all, I am very thankful for the loans – they gave me an opportunity to go to college in my chosen field, without them I would miss on that chance, most likely. I think when managed appropriately, student loans are a GREAT tool. But yes – student has to evaluate employment prospects in the chosen field, and to realize that this money is to be paid back!

“…community college and degrees from mediocre institutions will not give today’s graduates a competitive edge in this global economy.”

I couldn’t disagree more. Just because a school isn’t a “name brand” college doesn’t mean it’s mediocre. I went to top 50 private colleges for undergrad and for my MBA. I had student loans for both and I still owe $30,000 at the age of 40. I worked in government, at MIT, at small companies and 2 Fortune 500 companies and now I own my own business. And there is nothing I’ve done that I couldn’t have done with a degree from a community college and a state college. There were a lot of great things about my schools, but if I can’t pay for my kids to go to a private college I am going to recommend that they do everything possible to avoid loans, and if they have to go to a state college to avoid that then that’s what I will suggest they do.

There are a few fields where it is a big deal where you went to school (which I now consider ridiculous – and I used to be a huge college snob). And yes, you may make great connections if you go to Harvard. But after 18 years of work experience, and now as a business owner myself, it generally doesn’t matter where you went to school. It matters that you went, that you learned something, and most importantly it matters that you have a good work ethic and can think creatively and analytically.

There’s this ridiculous myth out there that you have no choice but go $200k into debt to get a degree that will get you a job and it’s just. not. true.

So it took you 16 years to pay down $15,000 in principal? That’s only $78/month. Have you taken any vacations in the intervening 16 years? Bought a house that was maybe $78/month bigger than you really needed? Bought a car that was more than you really needed? No offense, but I find it hard to believe that in 16 years, you could only spare $78/month to pay down low-interest debt. There’s waste in there somewhere, and you haven’t made your loan a priority.

As many people know, student loans are the one thing you will have to pay – even if you declare bankruptcy.

Not to nitpick, but tax debt and child support also cannot be bankrupted. And what’s so wrong about being forced to pay back what you borrowed, when the thing you spent the money on was specifically intended to boost your earning potential?

I am convinced that our government and the higher education schools are making a ton of money off the student loan system.

The same government that provides billions and billions of tax dollars to those institutions to subsidize education is somehow “making money” by charging below-market-rate interest on unsecured loans? In what world could you possibly believe that a government who picks up 60+% of the total cost of your education, asking you to only pay less than half the real cost, and even lending you the money at subsidized interest rates to cover your share could possibly be “profiting” from the arrangement?

As much as I hate to say it, maybe the key is REALLY know what you want to do before starting the education, so maybe take some time off and figure it out. The reason I hate to say it is that I’ve seen so man people put off school for so long that in their 40s they’ve finally decided what they want to do, but it’s hard to go back with so many family responsibilities.

I would like to stress that junior/community colleges can be a fantastic bargain! My daughter just finished an associates degree at a junior college and came out debt free (with a little help from us but not too much). She now has a clue of what she wants to do as she transfers to a university. Her junior college allowed her the opportunity to live away from home (which I think is important for most kids), and this was possible because she got a great scholarship covering tuition and part of her housing. She wasn’t a stellar student but good enough for a scholarship at this small school.

And I agree that law school does NOT have to cost $35k a year if you can give up your dreams of a private school education.

@Jim, what state are you in? Here in PA, you can attend Temple Law for 20k. Not cheap, but a year or two of living at home, working, and saving would put a real dent in that kind of tuition.

I also want to echo the sentiments of others about a dreary law market. My husband and I were just at a fancy black tie dinner filled with high earning middle aged lawyers. A fair number of them were talking about their children and mentioning how difficult it currently is to be starting a career in law. Companies do not want to pay high priced law firms to train associates so a fair amount of work that used to be given to first and second year associates is now outsourced at $10 to $15 an hour, some of it’s even going to India! That equals less hiring at firms.

And that means there’s a lot more competition for the government jobs. Jobs that used to go to the middle of the graduating class are now being taken by the top grads. Forget about an assistant prosecutor job unless you were a stellar student.

There’s a general sentiment among the legal community that the implosion of Dewey is just the tip of the iceberg.

I know you already know all this but if your son decides to read the comments here, I thought it would be helpful to add another voice warning him to stay out of law school or at the very least stay out of debt.

Mom of 5,
We live in Colorado. In state tuition at CU’s law school is just over $34,000 – that does not include books or anything else – just tuition. It’s obscene, but DU, the private law school charges over $40,000 for tuition alone. That leaves him with the choice of finding something out of state that’s cheaper tuition-wise, but then he wouldn’t be able to live at home for free. So, we’re left with the “what to do”. Nice to know that at least in Pa you can get a law school education for $20,000/year. That’s not the case out here. Thanks for your input.

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Carlasays:

06 May 2012 at 1:59 pm

yeah, ok.

So 15 years ago you were able to work and go to school full-time. And you fell into the perfect job. By the way, health care continues to be where it’s at, given an aging baby boomer population.

It’s 15 years later and adult children are living at home with their parents, going on to get a master’s (because they can continue to defer debt) or working a mind-numbing service job which doesn’t pay down the loans. There is very little way to go to both college full time and hold a job full time–and even (as others have also noted) a full time job doesn’t cover education expenses, let alone living expenses.

And, as others have correctly noted, the bachelor’s is a ticket you need in order to move on and up (some say it’s the high school diploma of this generation)

A new study says because these graduates are starting behind they’ll never truly catch up, salary-wise.

What to do?

I really want to know. As a high school career and tech education teacher, what do I tell my students?

There isn’t an easy answer to your question, Carla. I do believe that students need to compare the cost of their education to an average salary they could expect with their degree. Paying $12,000 for a 2-year education when the expected annual salary is $40,000 is much different than paying $50,000 for a 4-year education with an expected annual salary of $40,000.
I think students need to be really creative and really consider the costs of student loans and college itself.
I realize that my story doesn’t seem applicable to many and that I got really lucky (I did). But what I didn’t share is that I went to school for 40 hours per week and worked 30 hours per week at jobs in the hospitals for $7-8/hour. I shared a dingy duplex with two other people, drove a crummy car, and ate cheap food. If anyone can take anything away to apply to their own situation, it’s that sometimes sacrifice for a short time is worth it in the long term.
As far as funding, above I mentioned that, for two years, my students could opt to have their entire tuition, fees, books and other things paid for by a grant. The only thing they had to do was collect and fill out paperwork. I estimate that it would have taken them five hours total and that those five hours would have resulted in approximately $10-12,000…and graduation with no student loans (at least from our program). At first, only 50% of the students did this. It was not worth it to the other 50% to collect this paperwork. When I asked the rest if they would like to earn $2000/hr by submitting paperwork for the grant, I had others who applied. Keep in mind that anyone who applied was going to get the money. Unbelievabl!
This experience and others have led me to believe that student loans are not taken seriously. It’s easy (usually) to get them, it seems like a good investment, and everybody does it. I don’t think student loans are always bad and may be unavoidable in many cases. However, it’s a lot easier without them and I still think, in this economy, that it’s possible to take out less money in student loans by thoughtful analysis of many factors.
Good luck with your students, Carla. They need you!

It wasn’t actually my college, but a grant that my program received. Only students in my program were eligible for it. Sorry if that wasn’t clear.

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Charlottesays:

09 May 2012 at 4:27 am

Community college. Going to school part time while working. I put myself thru my nursing pre reqs debtfree at the age of 17-19, by working part time and college part time around 2000. Then I was able to get an interest free loan for most of the rest and graduate with only $2500 worth of debt paid off in less than a year. My husband is now doing something similar. He has been working fulltime-overtime with 1-2 kids and taking evening classes. I only work part time and we have paid all of it or had a Pell grant. The most we have made is $70,000 and that disqualifed us for the Pell the next year. Now he is quitting his job to start the actual program and I will be working more to support us. We also saved up enough money for a down payment to purchase a new double wide for our property due to need for space during this time. And paid medical expenses for childbirth with no health insurance.

Interesting story. The way I see it, Lisa was not only working hard and making good (for her)choices, she was also very lucky. Not everyone can be at the right place at the right time. As for one of the readers bashing “vocal performance” majors and anyone in general who is willing to take on 6-figure debt… There are lots of ways a vocal performance major or a dance major can apply themselves that you are not aware of. For example, art therapy is one unexpected application of this “impractical” degree. I know a wonderful dance major who created an innovative program that helps students understand math. As for the 6-figure student loan debt, just talk to anyone who went to college to become an airline pilot and the amount of money they had to pay for flight training alone (and no, they don’t make a lot of money fresh out of college).

“As for one of the readers bashing “vocal performance” majors and anyone in general who is willing to take on 6-figure debt…”

There’s nothing wrong with being a vocal performance major, but it would be very unwise to borrow $100,000 for that major. A student might well find that they have so much debt that they cannot pursue the passion they borrowed for because they need to make more money to pay off the debt. That would be really sad.

“As for the 6-figure student loan debt, just talk to anyone who went to college to become an airline pilot and the amount of money they had to pay for flight training alone (and no, they don’t make a lot of money fresh out of college).”

I have a cousin who is doing pretty well as a young pilot. His family put huge amounts of money into his flight instruction. Along the way, there was a long stretch where the only flying job he could get paid $18k a year. He had to take the job in order to keep up his flight hours, so the company really had him over a barrel. He’s since moved on to a job that pays around $60k, but imagine how unmanageable it would be to be making $18k, supporting a growing family, and paying student loans.

I just want to say that the biggest reason the tuition keeps going up is that government support for higher education is being slashed. Many public colleges that used to get three quarters of their operating costs from government now get less than half the support they used to get. They have to get the funds somewhere, and eventually, all that is left is to get it from tuition.

I’ll have to disagree. I think the biggest reason tuitions keep going up is that people have easy access to loans and thus far have been willing to take them out to pay for college. Colleges have been spending like crazy on fancy new dorms, health plexes, expansions, etc. No doubt decreased state funding plays a part in increased tuition, but I don’t believe it’s anywhere close to playing the biggest part.

If you look at university spending PER student its only gone up around 4% a year which is more inline with inflation.

Tuition has gone up significantly primarily because state funding keeps getting cut. Yes they have to build new buildings but that is not the primary reason for increased costs and more a reflection of more students. At my almamater they are building a expensive new football stadium and spending over $100M on capital improvements. Shows bad right? no… The football stadium is not funded by the university and the $100M in capital improvements are long over due and equate to about 2-3% of the universities total operating budget.

Great article! I think sometimes we are so in love of bachelor’s degrees for everyone that we forget about very good two year degrees. They can get you a great job and some of them can eventually lead to bachelor’s degrees.

Haven’t dug through all the comments to see if others have already raised this point, but this struck me as an odd sentence in a post about avoiding loans for education:
“But, through some sacrifices, I was able to pay for my last semester ($1250) with savings and creative juggling of credit card due dates.”

So instead of taking out a student loan, you kited the money around on multiple credit cards (presumably paying balance transfer fees every time)? It has obviously ended well for you, but for college student readers of this article: a student loan for $1250 will be a much more sensible move than reaching for the credit card. It will include a lower interest rate (if you are in the author’s situation, most of the loan will probably be a Pell grant) and many federal student loans pay the interest for you while you are in school (again, if your situation is similar to that described by the author).

What I do like about this story (aside from the troubling academic nepotism), is it demonstrates the social value of subsidized community college education: such programs can quickly train people in in-demand fields even if the individuals do not have deep pockets to cover the cost of their own training.

I charged my tuition on the first day of my credit card cycle which gave me about 6 weeks until the due date (vs 2 weeks if I would have paid it at the end of the cycle). Definitely the least important part of the whole thing.

Kudos to you for being able to get through college without student loans. I was able to do the same and it allowed me to put money into a Roth IRA. Those monies provide a stable future for my family. It’s such a blessing!

I think the comments overlook the enormous role the mentor played in this woman’s life. This is not a story about student loan debt/no debt though it is tempting to make it about that. Life for grads in 1998 is not at all similar to life for 2012 grads, you really can’t compare those numbers. But the role the mentor played in guiding and directing this young person into a mature adult worker was amazing. How many of us can say we had a person take a similar degree of interest in us as we came out of college?

This. I admire and respect Lisa for her accomplishment; graduating in an employable field without debt is fantastic. At the same time, her mentor was a vital part of her success (along with the hard work).

IMHO, in regards to personal finance and career, people have a tendency to place most or all of the credit for success on hard work and frugality, whereas it’s really only part of the credit. The rest comes from being in the right place at the right time.

Read Malcolm Gladwell’s “Outliers: The Story of Success.” Excellent book that makes this point abundantly clear.

Seems like her mentor’s help was borderline illegal. I don’t know of any educational institutions that aren’t required to publicly post available positions, and despite this person’s connections, I also can’t believe that there weren’t dozens (if not hundreds) of more qualified applicants for her job. But then, I work at a large state institution. We get over 200 applications these days even for front-office reception-type positions.

My mentor’s help was definitely not illegal. The job was posted and there were only two applicants (the other one was not qualified). Even today, similar positions posted at other institutions get 3 or 4 applicants. I believe it’s because of the lower pay in academia and the general lack of advanced degrees in my field, so people aren’t qualified.

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Teenasays:

07 May 2012 at 8:35 am

What amazes me is the fact that parents do not accept the responsibility for their childrens college expenses. I am aware that there are situations where they simply cannot, but all around me I see parents who make good money but instead of investing in college savings accounts, they choose to spend their money on more house than they need, new expensive vehicles, clothes, eating out, vacations, etc. My husband and I worked college savings into our budget before these things and did without alot of them. Because of this, our sons will graduate with no debt. It would really infuriate me if student debt was forgiven after the sacrifices we have made.

Teena,
I couldn’t agree with you more re: having the parents take responsibility for their kid’s college undergrad tuition. We did that for all our kids. And they all got thru debt-free – but it wasn’t easy – we were paying off our own school loans at the time. The problem we’re facing now is saving to pay off the mortgage and funding our retirement, at the same time our kid wants to go to law school. I just don’t see how we can do all of that. He’s more than willing to live at home and save as much as he possibly can, but still with tuition alone being more than he will make (not to mention books/food/housing etc)I don’t know how he’s going to be able to do it.

Sounds like you guys have done a great job! Undergraduate tution is all we can handle also. If either son decides to go to graduate school they will have to figure out a way. At least by then, they are more mature and able to make intelligent, responsible decisions concerning debt, as opposed to 18 year olds just starting out. The gift of undergraduate tution is one of the best gifts you can give your child.

I love how the advice is always to “live at home” and attend a public institution, when not everyone:

1) has still-living parents,
2) who are willing **AND** able to provide housing for adult children,
3) who currently live commuting distance from an institution of higher education,
4) that happened to admit you (higher education, particularly graduate education, is selective in their admissions process – even excellent state schools).

I think that Lisa would have found a way to graduate debt-free regardless of the specifics of her circumstances. Her main resources were:
1. determination
2. planning, including picking something she could get a job in immediately.
3. Working hard, which got her noticed by her mentor
4. Willingness to sacrifice now for the future
5. Being open to opportunities that came her way and say “yes” when they made sense.

Thanks, slccom. I really appreciate your comment. My father was diagnosed with terminal cancer one year into my allied health program and he died 9 months later. I contemplated quitting school when he was diagnosed because I felt I needed to find a full time job to take care of my mother and younger siblings. He really encouraged me to continue, and I am so thankful I did. His encouragement gave me the determination to keep going.

Honey,
I hear you. When I was in undergrad, my parents had divorced a year before. With 6 kids and a stay at home mom (who had to quickly enter the work force) there was no financial support for me. I took out loans, lived really cheaply on my own and when I just didn’t have enough $ for food, I dropped out, worked construction and went back for another semester when I was able to. Finally graduated about 2 years behind schedule and with a chunk of student loans. It’s tough – but you learn a lot of life lessons doing it that way.

I’m a bit tired of the rhetoric around college, student loans, and “worthless” majors. Clearly our system is broken, but blaming students for this breakdown is a bit unfair.

First, college is radically different than even ten years ago. Schools used to be primarily funded by the state. Now they are primarily funded by tuition and fees. This means students actually attending are paying significantly more with fewer options. If you went to school during the booming 90′s you don’t get to talk to students who went through one of the deepest recessions about working your way through college. Really, no previous generation should be lecturing on this topic because we know that real wages have gone no where since the 1970′s for the lowest earners (which is what HS grads tend to be)and that people are more educated than ever before.

And why do we expect 17/18 year olds to be able to make well informed decisions about this? We already know that developmentally they tend to not be able to make these cost-benefit analyses. We already know that we set them up with unrealistic expectations for future employment and earnings. We tell them they absolutely need this education, but set them on a path toward disaster.

I absolutely disagree that this story is irrelevant in these times. I just went to a local web site that lists jobs for applicants with associates degrees in the allied health field. (I live in a large city in the midwest.) The site listed dozens of jobs. Many of the employers offered tuition reimbursement for job-related degrees to the tune of $3000 per year. So it is definitely possible for a young person to go to a community college, get an associate’s degree with minimal debt, and then get a full time job and slowly earn their bachelor’s degree.

I think what people are trying to say is that the author’s experience is only relevant to a subset of today’s college students because not everyone wants to pursue a degree in allied health.

Basically, it’s not one size fits all. This might work for some people, but if they’re not interested in allied health then they’ll have to find college funding some other way for whatever their program is. For some people, it’ll end up being student loans.

Dana, Allied Health is not the only field in which students can get an associates degree and then work full time while getting tuition reimbursement. My son did this while pursuing a degree in IT. I realize not all students can pursue this path, but it is doable for many and thus this story is NOT irrelevant.

One additional way to reduce dependency on student loans is to use College Level Examination Program and DSST tests to get credit for your general education requirements. CLEP (http://clep.collegeboard.org/) is a program run by the the College Board (the SAT and Advanced Placement people) that is accepted by almost 3,000 schools and you can earn between 3 and 12 credits per test. DSST (getcollegecredit.com) is a similar program run by the Department of Defense but available to all. Tests are $100 or less. Combine that with nontraditional programs like Straighterline (straighterline.com)and you could save big money.

Lisa, no student loans? working while you are in college? Paying cash for and driving reliable used cars? You are so weird….AND I LOVE IT! Congratulations on staying debt free and I am sending as many good vibes as I can in your direction. I am rooting for you as you embark on your next goals in life

I personally think student loans can be very helpful to get people into college sooner rather than later. But of course you should be prudent and limit your debt levels to a manageable amount. And of course if you can get free education then all the better.

I don’t think people should feel entitled to free education or debt forgiveness. I’m not opposed to free education really but its not how our system is setup. If you want a free education then theres various ways to do it. I don’t think a free ride for everyone/anyone is really warranted or necessary. We already do fund the majority of college costs via tax dollars, subsidies for financial aid, tax credits so theres lots of free money and opportunity. With all the financial aid available theres really no reason anyone in the US can’t afford college if they want to go. (of course aid levels also vary state to state and some are less generous)

Kids graduating with $100,000 or more in debt is not at all the norm. ONly 0.3% of people with a 4 year degree graduate with that kind of debt. The media almost makes it seem like half the kids graduating nowadays have 6 figure debts but that is absolutely not typical. The average is closer to $25-$40k level. At my alma mater the median debt is $0 since over half of grads have zero loans. (of course not all schools are as generous with the aid).

Raising tuition rates are primarily due to decreased state funding. This has been happening for 3-4 decades. State tax dollars are funding a shrinking share of the college costs and that hole is filled by higher tuition. For example University Texas Austin used to get 50% of its money from the state in the 80′s and now the state only provides about 25% of their funds.

Yes the economy and employment rate sucks for new grads. But lower loans certainly makes that easier situation to handle than a student with a big fat loan bill.

I wish someone had told me at a younger age how painful it is to have student loan debt! My friend just paid off $45,000 in one year (she is a master of minimizing expenses and maximizing her income) and I am on my way to paying off $60,000. Should have gone to state school!

I REALLY enjoyed your story. thanks for sharing. I lived at home and wasn’t self sufficient as you but I had no student loans, a few scholarship and paid cash for books with the money I earned at an internship job I’d has since high school.

The comments have really bothered me, and I was not sure why-I believe in “live and let live”. I realize others may choose to take out student loans. It just struck me that I have a distant relative who has taken out $100,000 plus in students loans to major in music education/vocal performance. But the kicker is that her father has a blue collar job at a large state university. He begged her to get her degree where he worked, and receive a 75% tuition discount. I still do not understand why anyone would make the decision she did. Please note that she is not attending Juilliard, just a private college in our state. Oh well, I will not be repaying her student loans. But these kinds of decisions sometimes make me wonder.

I had a friend who did this. His mom worked at Cornell and he could have gone for free. But he wanted to go into the Communications program at Ithaca College, which even in 1992 was seriously not cheap. Well he had to work 3 jobs to afford it, so he could not keep his grades up and got kicked out of the Communications program, and just kept working his 3 jobs and paying for expensive school that didn’t get him what he wanted.

On the plus side he never had to go into debt, and now he has a life he is perfectly happy with.

I now recall that my mother used his family as an example of other people’s money choices; they went to Florida for 2wks/yr while we stayed home, but my parents had money for me & my sibs to go to school where we wanted, no debt & no jobs required.

Timely post and good article. Students are making these decisions right now. There are many paths to earning a college education, and paying for it, and it is great that you shared your story. Unfortunately, at such a young age it is difficult for students to understand the consequences of the major investment they are making, and the potential return on that investment. Often students and parents have little guidance when they are making this major financial decision. The WSJ ran a story a few weeks back “To Pay Off College Loans, Grads Put Off Marriage, KIds,” and it resonates with your story.

William “Upski” Wimsatt had an interesting take on education expenses in his book of essays “No More Prisons” (just to clarify, he wasn’t referring to schools as prisons; the title refers to another topic he discusses in the book). Wimsatt is a huge advocate of self-education as a way for young people who would be able to pursue their passions outside a college setting to incur a lot less debt. Here is an excerpt from one of his essays on self education:

>>So I quit college and enrolled as a student at the University of Planet Earth, the world’s oldest and largest educational institution. It has billions of professors, tens of millions of books, and unlimited course offerings. Tuition is free, and everybody designs his or her own major.

1.Recognize that you’re self-motivated.
2.Enjoy yourself.
3.Team up with others.
4.Scare away your shyness.
5.Save all your ideas
6.Act on what you learn.
7.Attend conferences.
8.Feed and water your mentors.
9.Don’t quit school if you like it.
10.Recognize that friendship is learning.
11.Be prepared to be scared.
12.Don’t be afraid to ask for help.<<

Not a great solution if you want to be a neurosurgeon, but it could make sense for a LOT of young people not wanting to dig a huge financial hole for themselves early in life.

I was a single very-non-traditional student (40) when I graduated with a BS earth science degree in 2009 with NO debt. Looking back I’m not quite sure how I was able to do it, and it wasn’t because I had any money of my own.

I went to a small state college. I kept my GPA way up and I applied for every grant and scholarship that I could. I also worked p/t on campus or at intern jobs to pay frugal living expenses. Tution was reasonable, about $2500/semester for a full time class load. I got enough in Pell Grants, state grants and scholarships each year to cover all tuition and some living expenses.

That wasn’t very long ago but I’m not sure it could be still done today.

We saved abit of monmey for our child who will grad in one week from HS. I believe in the CC system–no reason for a child not to go to a community college and to live at home to save on room/board. Also,continue to work on the side. No reason to pay 20,000 plus a year for an education only to grad and maybe not have a job or making 30,000/yr w/ that kind of debt. Most parents that I talk to do not even appear to have the talk of true living expenes after they enter the real world on top of this student debt.

I also payed for my education—working during the day and going full time to college at night. It was TOUGH.

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